This was posted yesterday on the Yahoo message board for Usana Health Sciences. It has some details that I think could easily be proven or disproven. This is not the first I have heard of cancelled auto-ship and lower recruiting of new Usana associates. Here is the post, and the bold lettering is my emphasis:

On April 4th we announced to the Street that we had a record closing week of the quarter and a record attendance at the Las Vegas regional convention. Profiled at the convention and brought out for the public was Duke Tubtim, a one star diamond associate. What we would not announce three days after the close of month one quarter two is a downward guidance. Read the below carefully. It is all the proof one needs.

Susicious trades of Dow Jones & Co. stock just prior to the announcement of News Corp.’s offer to purchase are under investigation by the New York attorney general and the Securities and Exchange Commission. Dow Jones received an unsolicited offer to be acquired about two weeks ago. Over 10,000 Dow Jones call options were traded in late April, compared to a total of about 7,000 in the entire first quarter of the year. On Tuesday, shares of Dow Jones went from $36.33 to $56.20, which would give traders of calls huge profits.

Oklahoma City hand surgeon Houshand Seradge is being accused of Medicare and Medicaid fraud, and the federal government is going after $40 million from him, his family, and his associates. A civil suit against Seradge alleges 6,400 false claims filed by him and his associates, with the claims totaling over $2.6 million.

The doctor and his practice, Orthopaedic & Reconstructive Center, issued a statement saying “… reimbursement rules are complicated and subject to varying and sometimes inconsistent interpretations. Dr. Seradge … and the others named in this matter deny any intentional breach of any such rules..

The situation came to light seven years ago, when three whisleblowers brought forth the case, which was filed under seal. The case was unsealed in April and the federal government intervened, as is its right.

The government is seeking recovery of the $2.6 million, triple the $2.6 million in damages, plus $5,000 to $11,000 per false claim filed. The filings happened between 1994 and 2007.

The Wall Street Jouranl reports that home buyers who signed contracts when the market was hot are now trying to get out of them.? The buyers are claiming that they were scammed into homes they couldn’t afford or that they were victims of fraudulent investment schemes. Others are looking for loopholes to get out of the contracts, or trying to find small defects in the homes that may help them escape.

Cancellation rates on these home buying contracts may be as high as 30%. The story highlights a few situations in Florida, where attorneys are even advertising their services to people who want to get out of their contracts.

In one situation a woman and her husband got three construction loans to buy three houses totaling $750,000. The couple’s wages are about $90,000, so they should not have qualified for these loans. They now claim that the real estate broker promised to find tenants for the houses, but that never happened and two of the loans are in foreclosure. A suit is being filed against the builder, the lender, and the real estate agent, alleging the couple was defrauded in this “investment scheme.”

Some builders are not backing down. A developer in Florida has multiple buyers trying to cancel contracts for condominimums. The developer is citing a “specific performance” clause in their contracts, which requires the buyers to close on the sales. Some buyers are willing to walk away from their 10% or 20% deposits on the properties, but this developer says that’s not enough and they need to make good on the contracts. Some who have been sued by this developer eventually closed on the sales rather than litigate.

Richard Davis and Trademark Properties are finally back with their new television show “The Real Deal.” The company was previously on A&E with their show Flip This House, but litigation put a stop to the show. A&E hired some really lame replacements to do the show, but it was never the same.

Now Davis is on TLC with the new show. I’ve watched the last couple of weeks, and the show is as great as ever. The crew is buying properties and fixing them up super-fast, which makes for great television. Kudos to Richard, Ginger and crew for coming back in style!

Reuters published an interesting article about lawsuits against short sellers… like when Overstock sued Gradient Analytics and Rocker Partners.

“Short sellers” profit when a company’s stock price goes down. Negative information about companies tends to send the stock price down, so you can see the potential correlation here… short sellers benefit when negative information is made public.

David Rocker, retired general partner of Rocker Partners, discussed his lawsuit experience with Overstock.com. He was accused of purposely trying to push the stock price down.

While surfing the ‘net for interesting reads on Overstock.com CEO Patrick Byrne, I came across a post by Jeff Matthews, whose blog is “Jeff Matthews Is Not Making This Up.” Jeff came up with the “Patrick Awards.”

The awards are given to those corporate executives who make the strangest comments on earnings conference calls. They’re done in honor of Patrick Byrne, who has been known to say some bizarre things on conference calls. (And the word “bizarre” is being very polite.)

Jeff says:

Lest you think I am making that up, Byrne.s commentaries have involved dead cows on the highway conspiring to delay his company’s projects, dead Popes conspiring to slow his company’s sales growth, and even unidentified .Sith Lords. conspiring to ruin his company.s credibility among investors.as if Byrne needed help in that regard.

Jeff gives the following awards (but you’ll have to go to his blog to see who the winners are):

* The Did He Really Ask That? Award
* The Most Cringe-Making Analyst Question Award

I’ve been taking a look at some of the inventory numbers in Overstock’s most recent 10-K. I have plenty to say about the issue, but thought it would be fun to raise just one question for now…

The 2006 Overstock 10-K represents the following:

We ended 2006 with $20 million of inventory, significantly lower than the $93 million we had at the end of 2005. From this lower inventory level, we expect to turn our inventory much more efficiently. We have entered 2007 with more attractive, higher margin inventory, and as a result, we expect our gross margins in 2007 to increase significantly over 2006 levels.

Johnnie Frazier, the inspector general for the U.S. Department of Commerce, is being investigated by a congressional committee based upon allegations of fraud, waste, and abuse. Among the allegations:

• Bid rigging for friends – Arranging a $150,000 no-bid contract for a company related to a member of Frazier’s staff.
• Charging the government for improper travel, which was unrealted to government duties – It is even alleged that he told people some of the trips were to find a new job.
• Wasting money remodeling an office – It is alleged that Frazier had walls in the office removed to create more open space, but then had the walls rebuilt when an employee complained about working in a cubicle, with the whole process costing more than $100,000.
• Preparing fraudulent documentation related to the hiring of a “pre-selected candidate”
• Ordering subordinates to prepare job descriptions for positions that would ensure Frazier’s friends would qualify
• Destroying emails and documentation related to his midsdeeds

Frazier’s job as inpector general includes detecting and preventing “waste, fraud, abuse and mismangement.” The fraud allegations apparently come from whistelblowers in Frazier’s department.

A new report by Fraud Discovery Institute contrasts the two Usanas that exist. There is one Usana story told to potential distributors (make lots of money!) and a different story told to Wall Street (only 12% actually want to make money!).

There’s one story about Research & Development given to the media (we are cutting edge – we spend lots!), and a different story told by the financial statements (Usana spends less than 1% of net sales on R&D).

There’s one truth about losing money with the Usana business opportunity (Dave Wentz says it only happens if you throw vitamins in the garbage), and a reality experienced by many failed distributors like Jane Bishop (she lost $5,000).

The media is told that Usana associates make lots of money, but Usana’s own documents show that:

• 72.2% of commission is paid to the top 2.6% of associates
• 67% of associates don’t even receive a dime in commissions
• 86% of associates don’t even make enough in commissions to pay for their vitamins

I wonder what the Usana executives have to say about this…